Sale of Owens-Illinois plastics business on the cards
hiving off its plastics packaging business as it reviews strategic
options for the division.
Owens-Illinois (O-I) was being tight-lipped regarding any potential buyers or what sum might be expected from a sale, saying the company is still only in preliminary talks with financial advisors regarding options for the business.
Market analysts, however, have estimated that the sale could be worth $1.2-1.5bn (€0.9-1.16bn), with some putting the figure even higher.
"We do not believe the market is reflecting the full value of the business," an O-I company spokesperson told In-PharmaTechnologist.com.
The firm's plastics business comprises only around 10 per cent of the company's operations, following a significant divestiture of its blow-moulded plastic container unit in 2004 to Graham Packaging for around $1.2bn. The rest of the operations focuses on the company's core glass container manufacture.
"With the company sitting on around $5bn in debt, we believe that [the potential sale] will be viewed as an unequivocal positive," commented senior market analyst Ghansham Panjabi of Wachovia Capital Markets.
"A new management team, on top of recent portfolio re-jiggering has positioned the company on a solid footing over the next few years."
O-I is a leading supplier of glass prescriptionware packaging, and significant expertise in plastic prescriptionware packaging as well, having won several innovation awards for pharmaceutical packaging.
The company has been consolidating is European operations of late, axing five furnaces, 25 machine lines and 1000 workers, but 50 per cent of O-I's glass manufacturing plants are still located in Europe.
Back in 2005, company management indicated that the company could attain around $50-110m savings in their supply chain, and $125-225m in procurement savings by 2008; however, JP Morgan analyst Claudia Shank notes that the company "has achieved the low end of its targets to date."
The company is due to present its Q4 and full year financial results in a few weeks' time, when plans for the firm's future may be made clearer.